WEEKLY LEGISLATIVE REPORT – February 24, 2006

Title lending ‘reform’ could be worse for consumers

By Rep. Hugh Floyd

Over the past several years, the Georgia legislature has cracked down on various forms of predatory lending. First, restrictions were placed on traditional lending institutions, then the payday loan industry. Now the state is addressing automobile title loans.

However, a proposal under consideration in the House of Representatives, supported by members of the leadership, has the potential to be even less consumer friendly than current law. This bill would remove the astronomical 300 percent interest cap in the state’s existing law, giving lenders a license to charge what ever they wish.

Reportedly, some legislative leaders have received generous campaign contributions from car title lenders and are willing to make things worse for vulnerable Georgians, including students and military personnel, who don’t qualify for traditional low-interest bank loans.

In the bill, there are two redeeming provisions that reflect a semblance of reform. The first would require licensing and regulation of title pawn establishments through the state banking department, and the second would block lenders from pocketing a 100 percent of the yields originating from the sale of a seized vehicle. The current law allows lenders to retain all proceeds generated from a repossessed sale.

But we must turn the debate over this issue to the side of the consumer, not the industry, and improve the process for Georgians who borrow money in this manner, rather than making things worse.

The House unanimously approved legislation that would establish a study committee to review and possibly recommend changes in how Georgia decides how much money to spend on higher education. The formula by which the General Assembly funds the $1.8 billion budget for the University System has not been reviewed since 1982.

The resolution would establish an 11-member study committee with three members appointed from the House, three from the Senate, three by the governor, and one each by the University System chancellor and the commissioner of Technical and Adult Education. The committee would be charged to review the current financing and expenditures of the University System, as well as the procedures for prioritizing capital projects, and make any recommendations for changing them to the General Assembly prior to the 2008 session.

The state has lost more than $900,000 over the years because of motorists on Georgia 400 who failed to pay their 50 cents at the toll booth. Although a $25 fine per violation has been on the books, it too has often gone uncollected because of a legal loophole used by vehicle owners who claimed they weren’t behind the wheel at the time. In an effort to stop that method of getting around the system, House members adopted HB 1190, which seeks to close that loophole and enforce the penalty against the vehicle owner, regardless of who is driving at the time of the violation. Further, the fine would be increased to $70 per violation, and failure to pay the fine would result in revocation of the owner’s registration.

If home heating costs weren’t high enough, the House majority approved legislation that would fund efforts to construct another gas pipeline from Elba Island near Savannah to Atlanta and could cause yet another increase. At a cost of $300 million, consumers will absorb the effects of HB 1325 through a surcharge attached to their home heating bills. The bill’s sponsors argue that it will increase the supply of natural gas into the state thereby driving consumer costs down in the long run. But that sounds a lot like the argument offered in 1997 when the General Assembly deregulated the natural gas industry. After that initiative, Georgia went from the nation’s third lowest in home heating costs to third highest.

The House also approved and sent to the Senate HB 1023, which would close a legal loophole that allows couples who are under the age of 16 to get married when a pregnancy is involved. Couples 16 and 17 years old under the bill would now have to get parental permission, or if the parents are not available, they must petition the court for permission before they get married. Georgia was one of three states that allowed these teenage couples where a pregnancy is involved to get married.

The Child Internet Protection Act was also approved. HB 1055 requires local boards of education and local library boards to adopt policies that prevent pornography from being accessed through computers leased or owned by a library or school system. Online blockers and software programs must be used to enforce the policy. Written consent is required for anyone who wants to disable the blockers for legitimate research purposes. The legislation is basically a safeguard because Georgia’s schools and libraries are 100 percent compliant with existing federal law.

Thursday, Democratic leaders in the House and Senate announced a proposal that would give the General Assembly a final say before any changes could be made to the State Health Benefit Plan.  This legislation gets its legs from the Governor’s decision to switch to a single provider that left a wake of confusion and frustration for thousands of state employees who were for forced to switch to health care providers in the limited network.

For years, the only solace for under-paid and under-appreciated teachers and state employees was the family health coverage. Since the Governor’s reckless gamble with that coverage, it has become painfully apparent that healthcare is not a Republican concern. As a result, state employees who have been going to the same doctor for years were forced to travel distances up to 100 miles just to get the healthcare they needed.